Surgent's Handbook for Mastering Basis, Distributions, and Loss Limitation

 

   

 

 
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Overview

8.0 Credits

The most difficult concepts to master when dealing with flow-through business entities are the basis and distribution concepts. Major error and malpractice issues occur if the CPA does not fully understand the impact of these rules. This course is designed to focus on the practical applications of these rules.

Objectives

  • Determine initial basis and organizing tax-free under 351 and 721
  • Understand what affects basis and how to treat distributions
  • Pass the four loss limitation hurdles to deduct pass-through losses

Major Topics

  • Applicable coverage of recent tax acts and any new legislation
  • Executor's new IRS form for disclosing basis in certain distributed property; what about the basis of a property distribution from a trust?
  • How 179 limitations affect basis and how tax-benefit rule is applied
  • Basis implications of personal assets converted to business use
  • How to calculate basis of inherited qualified and joint tenancy property
  • S Corporations: - Beware of recent final IRS Regulations regarding "Open Debt"; - Determine how to calculate basis; worksheets are included; - Understand the effect of stock basis and debt basis and IRS's recent focus on "at-risk basis" for shareholders; - Recognize how AAA applies or doesn't apply to S corporations; - Learn to apply the complex basis ordering rules and special elections that can have a big tax result; - Discuss loss limitation rules in depth; - When you can have a taxable dividend in an S corporation; - Understand distributions of cash and property; - Understand the post-termination transition rules, which will be important if (when) tax changes bring the return of C corps
  • LLCs and Partnerships: - Learn the detailed rules of 704 for preventing the shifting of tax consequences among partners or members; - Learn to calculate basis under 704 & for "at-risk" under 465; - Recognize how recourse, nonrecourse, and qualified nonrecourse debt can create significantly different tax results; - Learn the difference between basis and "at-risk basis"; - Review 754 step-up in basis rules; - The economic effect equivalence test or "dumb-but-lucky" rule; - Learn to apply the complex rules of distribution of cash vs. property

Designed For

CPAs who prepare both individual and flow-through business entity tax returns and need a thorough grasp of these significant issues. This course is a must for practitioners to help reduce and avoid this exposure to malpractice.

Prerequisite

Experience in business taxation
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